This article is an excerpt from the 2021 edition of The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its March 2013 decision in Irish Waste Services Ltd v. Northern Ireland Water Ltd & Ors, the High Court of Justice in Northern Ireland, Queen’s Bench Division, upheld the results of a two-staged evaluation process after finding that the evaluation criteria and process rules were sufficiently transparent and defensible. The dispute dealt with a tender call for sludge management services.
A losing bidder claimed that the evaluation criteria were insufficiently clear and that the two-staged process was invalid. After summarizing the applicable transparency standards that apply to evaluations in a government tendering process, the Court concluded that the government had in fact disclosed the evaluation criteria with sufficient clarity and detail to enable bidders to prepare their bids:
…if a contracting authority wishes to rely on criteria or sub-criteria in evaluating tenders that it must inform potential tenderers of these criteria and the relevant weightings attaching to them in the contract notice or contract documents e.g. Linakis v Municipality of Alexandroupolis [2008] All ER (D172), Letting International v Newham LVC [2008] EWHC 1583 (QB) and McLaughlin and Harvey v DFP [2008] NIQB 91. I accept the defendant’s submission that in this case they set out in detail at Annex 5.5 the criteria involved and the weightings attaching to each. The plaintiff complains the award criteria were not set out “as such” but rather consist of a number of questions under each of five sub-headings. It does not appear to me that the absence of the word “criteria” is of any significance since it should have been manifest to the tenderers what was being assessed and the marking scheme. At paragraph [42] of his decision in McLaughlin and Harvey v DFP, Deeny J stated:
The defendant’s reference to this as a valuation guidance is almost an admission that these or some of these are indeed criteria. They are being used to evaluate the tender bids i.e. to judge them.
I agree with the defendant that no tenderer considering the documents could be in any serious doubt as to the nature of what was being evaluated and the methodology. Annex 5.5.1 to the ITN sets out specific questions which directs the bidder’s attention to those elements of implementation which are to be the subject of assessment.
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I therefore reject this ground of challenge and consider that the criteria were sufficiently disclosed by the nature of the questions in the ITN.
The Court then turned its attention to the two-staged tendering process used by the government, where bidders were first screened based on threshold quality criteria, with the short-listed bidders who met the threshold criteria then being evaluated on their price submission. The Court rejected the plaintiff’s challenge after deciding that the two-staged process was transparently described and fell within acceptable public procurement practices:
The plaintiff had submitted that a two stage assessment of award criteria, such as that which was adopted in the present case, in which tenders are compared and assessed in relation to some of the criteria, following which some tenderers are liable to eliminated before assessment of the remaining criteria, is not compliant with the directive and/or the regulations. It was submitted that the procedure established by the defendant failed therefore to comply with the principles which the plaintiff summarised at paragraph 22 of its skeleton argument and which were said to derive from the relevant portions of the directive and/or the regulations.
…I am quite satisfied that the defendant was correct to submit that the fact that a bidder is eliminated at the quality stage does not mean that his bid has not been assessed relative to the others. As they point out, all bids were subjected to the same process. I agree that provided a bid was able to meet the quality standard its price would be evaluated in accordance with Section 5.4.3 of the ITN.
I see nothing inconsistent or incompatible with the terms of the relevant directive or the regulations. The plaintiff referred extensively to the 55th Recital to Directive 2004/17/EC contending that it is impermissible to conduct a two stage process of evaluating quality and price. I disagree. The wording does not indicate that quality and price must be considered at the same time but rather as part of the same determination. The relevant portion of the recital provides:
…They must allow the level of performance offered by each tender to be assessed in the light of the object of the contract, as defined in the technical specifications, and the value of money for each tender to be measured.
There is nothing objectionable about a contracting authority setting minimum standards for quality which must be attained prior to an evaluation of the price of the bid. Indeed as it appears to me it is clearly in the public interest that those who do not meet a minimum standard for quality should not be considered. This is particularly so in the case of public utilities such as Northern Ireland Water.
Nor is there anything in the Utilities Contract Regulations 2006 which forbids the setting of minimum standards in relation to quality. I agree that it would be surprising if there were since “most economically advantageous” necessarily involves an inquiry into quality as well as price in contra distinction to the more basic means of award in Regulation 30(1)(b).
The court was referred to SIAC Construction v Mayo County Council [2003] EULR 1 where the ECJ recognised that contracting authorities were free to choose the criteria upon which they based their award since Regulation 30(2) was neither prescriptive nor exhaustive, provided that they were aimed at identifying the most economically advantageous tender. This reasoning was adopted by Coghlin LJ in Henry Brothers (No. 1) [2007] NIQB 116 at paragraph [15].
In Henry Brothers (No. 2) [2008] NIQB 105 Coghlin LJ at paragraph [23] stated:
Subject to those qualifications the authority has discretion as to the criteria that it chooses and the list set out in Regulation 30(2) is not exhaustive … it is not necessary for each of the selected criteria to be of a purely economic nature and factors which are not purely economic may influence the value of a tender from the point of view of a contracting authority.
It is of course, as Coghlin LJ held, very difficult to reach any objective determination of what was the most economically advantageous bid without some reasonably reliable indication of price or cost. In the present tender process, price was a very important factor but it was only analysed once a tender reached the minimum quality threshold.
I accept that within the discretion enjoyed by the defendant in fixing its criteria is an ability to eliminate bids which do not comply with threshold quality standards. Given the purpose of Public Procurement Regulation, I also accept that it would indeed be surprising if a contracting entity was not entitled to set a level of quality which had to be attained by bidders and for these reasons I reject this aspect of the challenge.
The Court therefore dismissed the plaintiff’s challenge. As this case illustrates, purchasing institutions remain subject to legal challenge on their evaluation decisions and should therefore ensure that their evaluation criteria are transparently defined and that their evaluation processes are based on acceptable procedures.
